* Banks gain as recent steep losses seen excessive
* Titan up on tax authority clarification on gold duties
* Nifty's seen supported at 200-day moving average
By Abhishek Vishnoi and Manoj Dharra
MUMBAI, March 20 (Reuters) - Indian shares posted their first winning session in four with lenders recovering as recent steep losses were overdone, but bigger gains were capped by auto stocks such as Tata Motors, which fell because of worries about lower sales.
The National Stock Excahnge Bank index rose 0.9 percent on Tuesday. The index lost 6.4 percent over the previous three sessions after the Reserve Bank of India left interest rates on hold and the government announced higher borrowing for fiscal year 2012/13 in its federal budget.
Though analysts still expect the central bank to ease policy less aggressively than previously thought, traders said banks had fallen too much, especially since the recent RBI's cut in the cash reserve ratio was seen improving cash liquidity.
Also on Tuesday, RBI Deputy Governor Subir Gokarn said slowing growth and a fall in commodity prices would help rein in inflation, raising some hopes the central bank could still cut policy rates at its April meeting in order to spur growth.
"Banking stocks rose on short covering today, primarily in SBI, ICICI Bank," said Ashish Chaturmotha, an analyst at IIFL Wealth.
The main 30-share BSE index rose 0.25 percent to 17,316.18 points after hitting its lowest close since March 7 on Monday, and recovering from a 3.6 percent loss over the previous three sessions.
The 50-share Nifty index added 0.34 percent to 5,274.85 points.
Also helping broader indexes recover were data showing foreign investors as net buyers over the previous two sessions. The Nifty is expected to see support at its 200-day moving average, currently at 5,165 points, analysts said.
Lenders were among the leading gainers, with State Bank of India ending up 1.4 percent, while HDFC Bank advanced 1.3 percent and ICICI Bank added 0.1 percent.
Meanwhile, jewelry maker Titan Industries Ltd gained 3.8 percent after the Central Board of Excise and Customs clarified the excise duty announced last week would be the same for branded and unbranded jewelry.
This is seen boosting Titan's earnings prospects and competitiveness given that branded jewelry drives the bulk of the company's sales.
However, among decliners, Tata Motors fell 4.3 percent after becoming the latest auto maker to raise prices for passenger vehicles to factor in the higher excise taxes announced in the 2012/13 federal budget.
The auto sector initially had a positive reaction to the budget given it included positive measures such as keeping taxes on diesel cars on hold, but higher prices are raising worries about sale volumes.
Kingfisher Airlines dropped 5.5 percent after India's aviation minister warned the company's licence may be cancelled if safety norms and financial viability conditions are not met.
(For full list of Indian shares that moved during the day, please see MARKET EYE items)
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